Texas Homebuilders Shares Hit Lows

Shares of two big Texas-based homebuilders fell to their lowest levels in more than four years on Tuesday after their chief executives said that the troubled housing market will weaken further next year.

"This is my fourth downturn," said Donald J. Tomnitz, CEO of D.R. Horton Inc. "No question about it, this is the most difficult downturn Horton and I have worked through."

Tomnitz said his company would continue to decrease housing starts to cut its inventory of unsold homes.

Timothy Eller, the CEO of Centex Corp., said, "There is no way to predict when this thing will bottom."

Shares of Fort Worth-based Horton, the nation's largest homebuilder by deliveries, slipped 17 cents, or 1.6 percent, to $10.41, their lowest mark since early 2003.

Centex shares lost 10 cents, to $18.28, their lowest level since late 2002.

The executives spoke at a Las Vegas conference sponsored by JP Morgan.

Their comments came a day after an influential and usually bullish housing analyst with Citigroup downgraded both stocks from "buy" to "hold" and cut ratings on six other homebuilders.

Homebuilders enjoyed a boom for several years but were caught with a glut of unsold homes this year when mortgages became hard to get and sales slowed.

Builders have slashed prices to sell houses, but buyers have stayed on the sidelines because they're having trouble getting mortgages and they believe prices will fall further.

Adding to the mess is an increase in foreclosures, dumping more homes on the market. According to RealtyTrac, lenders issued 635,159 foreclosure filings in the third quarter, nearly double the number a year ago.

The Census Bureau says there is an eight-month supply of unsold homes. The slumping market has caused builders to take huge write-downs reflecting falling values of their unsold homes and options on land.

Both Horton and Dallas-based Centex swung to losses in their most recent quarters, caused by falling sales and huge write-offs. Each builder has cut several thousand jobs and reduced the number of homes under construction.

Tomnitz said the current slump is different because speculators who had bid up prices disappeared.

"Once those investors could no longer buy a home and flip it for 15, 20 percent more, they left the market," he said.

The speculative bubble pushed up prices, which Centex's Eller blamed for the current state of housing.

Despite relatively low interest rates, he said, "We have more unaffordable markets in the U.S. than we've ever had," making it harder for buyers to qualify for loans.